Zynga Bets the Farm on Former Xbox Honcho

Beleaguered social game developer Zynga, creator of FarmVille, on Monday announced that Don Mattrick, who was president of Microsoft's Interactive Entertainment business, will become Zynga's next CEO.

Mattrick will begin as CEO and a member of Zynga's board of directors effective July 8. Mark Pincus, Zynga's founding chief executive officer, will remain chairman of the board of directors and chief product officer of the company.

Mattrick spent six years at Microsoft, the last three as president of the Interactive Entertainment business. In that role, he was responsible for the team that grew Microsoft's Xbox 360 global installed base by 700 percent to more than 75 million consoles. Previously, Mattrick served as the president of Worldwide Studios at Electronic Arts.

Zynga declined to provide further details.

'A Rabbit Out of Its Hat'

"Zynga is a company that has fallen onto very hard times," video game analyst George Chronis, editor of
DFC Dossier, told the E-Commerce Times. "Zynga obviously had to pull a rabbit like Mattrick out of its hat for wary investors unhappy with the publisher's fall from dominance on Facebook."

Indeed, Zynga had a good run with casual games on Facebook, but the market has changed in recent years, particularly as more and more people began using tablets and mobile devices.

"Zynga arguably grew too fast, resulting in it shedding significant quantities of staff and IP over the past 12 months," noted Steve Bailey, analyst for the games market at IHS Electronics and Media.

"With skill games purveyor King having taken the top spot on Facebook and the growth of mobile gaming attracting many former Zynga users, the publisher has been struggling to find a rebound strategy," Chronis added. "Investments in products like Draw Something have fallen flat. Meanwhile, revenue is declining.

"For the first quarter of 2013, Zynga revenue was down 18 percent over the previous year, with bookings down 30 percent," he added.

Going for Big Talent

It is obvious that Zynga needed someone with Mattrick's experience and -- just as important -- his reputation to help bring about a turnaround.

This is very much about a "need to restore both confidence and focus in its operations and its roadmap of output," Bailey told the E-Commerce Times. "An important target for Zynga is profit, and it needs a commercial leader who can organize and deliver that, especially given how it has struggled in this regard across 2012."

The company "needs to usher in a coordinated focus of its game-development resources, and this is where Mattrick's leadership could be valuable," he added.

'A Crowded Field'

Zynga "hired a guy who knows the traditional console game business, suggesting they are going to start building traditional games for those systems or -- more likely -- come up with a system of their own," Rob Enderle, principal analyst at the Enderle Group, told the E-Commerce Times.

"There is cloud gaming and several Android-based systems coming to market, so it will be a crowded field that Zynga will be entering late," Enderle pointed out. "The odds against this one are huge, but the alternative -- which is either becoming a vastly smaller company or shutting down -- were worse."

As for Mattrick, it's not entirely clear why he would leave Microsoft, especially as it faces a
battle
ahead with Sony for the living room and hard-core gamers.

"We fully understand why Zynga would want him, yet are still not convinced why he accepted the offer from a business perspective," said Chronis. "Rebuilding Zynga seems like a difficult long shot for Mattrick, but obviously it was more appealing than the Microsoft environment ramping up for the Xbox One launch."

'Investors Approve'

In any case, just the act of hiring Mattrick has already been enough to deliver at least some confidence.

"Investors apparently approve: Zynga's stock has soared more than 20 percent since the news was announced," Enderle pointed out.

"Can Zynga rebound?" he added. "It is possible, if they can somehow find a way to exist across an increasing diverse ecosystem with the kind of social game they are known for, which people want to play."

What's no longer possible, however, is "the console thing," Enderle said. "They just don't have the funding anymore. Their only real shot is multiplatform social, which is an area they know and where no one else seems to have much of a foothold -- other than Blizzard, which often doesn't seem to realize what they have."